Kolin Burges, a self-styled “crypto-currency trader,” certainly believes he is out more than $300,000 after Mt. Gox, a Tokyo-based bitcoin exchange, went dark Tuesday.

“I’m very angry,” said the former software engineer who travelled to Tokyo from London for answers after the company failed to tell him what had happened to his bitcoins which at one point were worth $342,000.

“It looks like that’s disappeared,” said Mr. Burges, one of six protesters outside the Mt. Gox office.

Some of them carried signs saying, “Mt. Gox, where’s our money?” and “Mt. Gox, are you solvent?”

Mr. Burges said he had 285 bitcoins with Mt. Gox meaning they were worth $342,000 when the currency was trading at $1,200 a unit last year. Although, if he held them earlier in the year when they were trading at $12, they were worth only $3,420.

ALL ABOUT BITCOINS

Q: What’s a bitcoin?A: Bitcoins are lines of computer code that are digitally signed each time they travel from one owner to the next. They are the basic unit of a new online economy which runs independently of any company, bank, or government. Because bitcoins allow people to trade money without a third party getting involved, they have become popular with libertarians as well as technophiles, speculators — and criminals.

Q: Who’s behind the currency?A: It’s a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto and then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention, but proponents say that doesn’t matter; the currency obeys its own, internal logic.

Q: How do you get bitcoins?A: One way is to “mine” them by using special software to “look” for bitcoins. Bitcoins are found by solving complex mathematical equations. However, the more bitcoins that are found, the harder the mathematical problems become. At first, so-called miners were able to use their computers to find the coins, now people usually “pool” their computational resources. Another way is to buy bitcoins through an exchange.

Q: What’s a bitcoin worth?A: Like any other currency, bitcoins are only worth as much as you and your counterpart want them to be. In its early days, boosters swapped bitcoins back and forth for minor favours or just as a game. One website even gave them away for free. As the market matured, the value of each bitcoin grew. At its height three months ago, a single bitcoin was valued at $1,200. On Tuesday, it was around $500.

Q: Is the currency widely used?A: That’s debatable. Businesses ranging from blogging platform WordPress to retailer Overstock have jumped on the bitcoin bandwagon amid a flurry of media coverage, but it’s not clear whether the currency has really taken off. On the one hand, leading bitcoin payment processor BitPay works with more than 20,000 businesses — roughly five times more than it did last year. On the other, the total number of bitcoin transactions has stayed roughly constant at between 60,000 and 70,000 per day over the same period, according to bitcoin wallet site blockchain.info.

Q: Is bitcoin particularly vulnerable to counterfeiting?A: The bitcoin network works by harnessing individuals’ greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn’t be an issue.

Q: If that’s the case, what’s all this talk about fraud?A: A lot of the mischief surrounding bitcoin occurs at the places where people store their digital cash or exchange it for traditional currencies, like dollars or euros. If an exchange has sloppy security, or if a person’s electronic wallet is compromised, then the money can easily be stolen.

Q: Is that what happened to Mt. Gox?A: It’s not entirely clear what happened to the Tokyo-based exchange, which has sometimes been criticized for poor security. It suffered a crippling theft in 2011, and several experts have since accused the exchange of ignoring warnings about a software glitch which could enable hackers to silently drain the business of its bitcoins. The glitch was recently fixed, but not before Mt. Gox imposed a ban on bitcoin withdrawals, feeding speculation that the exchange was out of money.

A document circulating Tuesday said unidentified thieves stole 744,408 bitcoins from the exchange — about $365-million at current rates — and the theft “went unnoticed for several years.”

But, as Mr. Karpeles said last year, bitcoins were a “high-risk investment … If you buy bitcoins, you should buy keeping in mind that the value could be zero the day after.”

Some financial analysts said the “virtual vanishing” of the Mt. Gox bitcoins could spell the end for the digital currency, rendering the stolen 744,408 bitcoins worthless.

“A lot of economists had been predicting that bitcoins days are numbered,” said Lisa Kramer at the Rotman School of Management, University of Toronto.

Since its creation in 2009, the virtual currency has become popular among tech enthusiasts, libertarians and adventurous investors because it allows them to make one-to-one transactions, buy goods and services, and exchange money across borders without involving banks, credit card issuers or other third parties. Criminals like bitcoin for the same reasons.

Tuesday, Mt. Gox went offline and its website was returning a blank page.

A document posted online that appeared to be an internal strategy paper said, “The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company.”

The document, which outlined plans for leadership changes, re-branding and a possible move to Singapore, was posted by blogger Ryan Galt. A person briefed on the situation at Mt. Gox, who asked to remain anonymous because the document was private, said he believed it was authentic.

The internal document said 744,408 bitcoins from the exchange had been stolen.

Mt. Gox said this month it identified a bug that enabled people to withdraw the same bitcoins more than once, leaving it vulnerable to hackers.

Central banks across the globe have been hesitant to recognize bitcoins as a legitimate form of money.

Mt. Gox “reminds us of the downside of decentralized, unregulated currencies. There is no Federal Reserve or [International Monetary Fund] to come to the rescue. There is no deposit insurance,” said Campbell Harvey, a professor at Duke University’s Fuqua School of Business who specializes in financial markets and global risk management.

This is not the first major bitcoin heist.

Last October, the Federal Bureau of Investigation shut down Silk Road, an underground website that trafficked in illegal drugs and traded in bitcoins. Most of its operations moved to a new “drug shop,” Sheep Marketplace.

But in December Sheep Marketplace also closed, saying hackers had stolen 5,400 bitcoins. There were other reports the site may have been a “darknet” scam and had absconded with 39,000 bitcoins worth up to $44-million.

Meanwhile, Silk Road 2 — set up to replace Silk Road — said this month it had been hacked using “transaction malleability,”the same bug that afflicted Mt. Gox.

Nicholas Weaver, a researcher at the Berkeley, Calif.-based International Computer Science Institute, estimated the theft at 4,400 coins worth $2.6-million.

Events concerning Mt. Gox are still confused, with Mr. Karpeles telling Reuters news agency the company was at a “turning point” but giving no details.

Joseph David, chief executive of the Canadian Virtual Exchange, a Calgary-based bitcoin exchange, said he was skeptical about the theft from Mt. Gox.

He said each bitcoin was tracked — a blockchain — so it could be determined where they went.

Either Mt. Gox had the supposed missing bitcoins, which could be established by showing the blockchain, or it was not willing to show its hand, Mr. David said.

“We don’t know which scenario is real or not,” he said.

“We don’t know if they have the bitcoins, or if they don’t have the bitcoins. We have no idea, no one knows.”

National Post, with files from The Associated Press, Reuters, The Canadian Press and Armina Ligaya

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